Articles I never published

I’m taking a break from publishing on the NZ Wealth & Risk blog. It might be permanent, I’m not sure.

Before signing off, I thought I’d share some articles that I wish I’d published. Most of them are partially drafted, but probably won’t see the light of day. If you have the time and inclination, you’re more than welcome to expand on these ideas and publish them somewhere!

• An article doubling as an “exit interview” with respect to Fairhaven Wealth. Reflecting a lot on my experience, including what I’ve learned, in the candid spirit of many of my previous articles about the business. In short: it has been a pleasure and privilege working with so many thoughtful and nice Kiwis. I have/had the best clients in the world! I feel like there’s an important place for independent, advice-only financial planning services, but I still can’t draw any strong conclusions about the viability of the model since my experience has been unique (n=1) and there were too many personal, exogenous factors. I’m ambivalent about the “fixed fee” model, and if I’d continued would have moved towards a hybrid time-linked-to-an-anchored-fee model.

• An article of things I’ve changed my mind on. Or, more specifically, things I feel less strongly about. For example, I feel a lot less strongly about fees, active versus passive investing, and the cost of cars. These things make a difference, but it’s pretty rare that they’re the differences that make the difference.

• Pensions/superannuation for Kiwis in Australia and Australians in New Zealand. This is probably the article I’ve worked on the most that never got published. And I feel bad about it.

• How my views have changed (and moderated) in relation to private education. It’s expensive, and there’s an egalitarian streak in me that doesn’t like the idea. But I also like the idea of people having choices, and I’ve become more convinced that for many people, investing in human capital is one of the best forms of investing there is. Historically, I’ve also been persuaded by articles suggesting that the outcomes between private schools and public schools are similar once you adjust for factors such as educational levels and characteristics of their parents, meaning that the benefit of private schooling is more about selection bias than the schools themselves. However, when I read the actual research, I’m not entirely convinced that you can confidently draw that conclusion. But ultimately, some environments are not a “fit” for certain students (at least one of my children included), and I’m glad there are other options available. (Arguments or rationalisation? I’m not sure.)

• Various articles about tax. Including how it can be an invisible fee (“tax leakage” being an example). Also, I’ve been mulling over how means testing can effectively be a tax on the middle class – and kind of regressive when you start to look at the impact of these policies on the middle class relative to people who are very well off. (Still not sure about this one.)

• Risks are correlated. When a sharemarket downturn occurs, that’s also the time when you might be more likely to lose a job, which might make you more vulnerable to health and relationship challenges. It’s important not to look at risks in isolation.

• An article that would have been a spiritual sister to the myopia of compound interest – the myopia of f#(k you money. Accumulating FU money (or achieving one of the many versions of FIRE out there) can be great, but it’s important to make sure that you’ve not chasing a pot at the end of the rainbow. Just make sure you’re not mistaking instrumental goals for more fundamental goals.

• Continuing to investigate how and to what extent property prices can grow at a rate that’s faster than economic growth. I touched on this here, but it’s still something I don’t quite get. (One of the biggest arguments might be that as other assets are deflationary, in that they can get cheaper over time, people will spend an increasingly higher proportion of their income and wealth on positional goods such as property).

• Why I think Universal Basic Incomes (UBI) are a bad idea. (A strong opinion, weakly held.) For one, most of this income will go towards positional goods where people need to compete against each other, specifically property. Give people more money, and they will eventually compete against each other to pay higher rents and house prices, which would nullify much of the benefit of a UBI. Also, unless a UBI is implemented globally (it won’t), it will make tensions relating to immigration even worse, since presumably people who enter a country will eventually become entitled to a UBI. It’s already a difficult topic, and will probably become more contentious as the climate becomes more volatile around the world, forcing people to move. Do we really want to hear about politicians engaging in this topic in even worse faith than they are now?

• An article exploring historical market downturns. This is quite chilling if you look at some of the worst-case scenarios. For example, after peaking in 1991, the Nikkei didn’t consistently get back to that level for another three decades! Similarly, the Dow Jones Industrial Average didn’t really grow for the 30 years between 1966 and 1995. If you want to explore this more, a good starting point is Ben Carlson’s blog, A Wealth of Common Sense. For example, how long do bear markets last?, how long does it take for stocks to bottom in a bear market?, and the biggest asset bubble in history.

• A discussion relating to online retirement calculators. In some, if not the majority of cases, I think these calculators are pretty awful, confuse more than clarify and sometimes generate fear rather than a sense of self-efficacy. (In some cases, this seems intentional.) There are several in particular I want to critique, but would need to spend quite a bit of time to ensure I don’t get into trouble! Had I but world enough and time!

• The efficient market fallacy. Emphasising that while some markets might be efficient (or inefficient in ways we can’t predict, so we might as well treat them that way), there are lots of markets where this isn’t the case. Many people who buy into “efficient markets” take the idea too far to other domains where this doesn’t necessarily apply. One of the best examples of this is how you utilise your human capital.

• An addendum to my article, there are no supermonkeys, but suggesting that perhaps there are supermonkeys – of a sort, in the sense that some people have special talents and have put a lot of energy and time into cultivating their skills and knowledge, and they might as well be supermonkeys compared to the rest of us. This was inspired by watching the Beatles in the studio, while watching Peter Jackson’s Get Back And by observing that although there’s always luck involved, there’s usually a reason many people achieve professional success. (Usually! It’s a factor, not a determinant.) The key idea is to encourage people to invest in themselves and build their human capital!

• Succession planning for wealthier people. “Living well is leaving well”. There are lots of considerations beyond what you put in your will, and many of them are “soft” – like communication and expectations.

• The concept of developing a “philanthropic portfolio”, influenced by many of the ideas attached to the Effective Altruism movement.

• A list of the many other personal finance blogs, podcasts, and resources that are currently available, including my brief, candid thoughts about each of their strengths and weaknesses. Some I like, some I don’t. All of them have strengths and weaknesses, including my own. We all have a unique perspective on the world, which is influenced by our experiences, our incentives, our assumptions, and our biases and presuppositions. I think you’ve “graduated” when you can look at lots of different resources and identify how they differ. From there, you can learn to apply what is relevant for you and what isn’t.

There’s many more! And most of the time, I come up with something and don’t stop until the article is ready to be published, and there are many more of those that will be lost to time. 🤷